Marian Danko | Weathering The VC Winter, Why China Will Win The AI Race, & Second Tier Cities To Watch

Today on The Negotiation, Todd speaks with Marian Danko, founder of the tech innovation platform weHustle; and TECOM, a conference for tech entrepreneurs. A native of Ukraine, Marian experienced culture shock upon arriving in China, particularly when it came to the rapid speed that defines the nation’s startup ecosystem.

Speaking on Shanghai’s tech startup landscape, Marian says that “the ceiling is very high and the floor is very low”. That is, while Shanghai can be regarded as “an expensive city”, from an entrepreneur’s perspective, it can actually be a wellspring of highly lucrative investment opportunities compared to Silicon Valley, London, Dubai, or Singapore.

Secondly, if a business owner wishes to put together an international team, the visa process is easier in China versus in the US. This means fewer costs and hurdles to have an international team based in one location.

Asked about the investment landscape in China, Marian notes that a distinction should first be made between local and foreign early-stage startups as each has very different challenges to the other. Foreign companies will not be able to avail of bank loans as easily as local ones, simply because they cannot be trusted to remain in the country after a few years.

With this context in mind, Marian says that venture capitalists are beginning to experience a “capital winter” in the country. He attributes this to the market becoming more mature. In the early days of tech startups in China, investors would actually lose money by banking on every trend that came their way. Having learned the hard way, they are now more savvy to the types of startups that are worth investing in. In other words, today’s investment landscape is defined not by quantity, but by quality.

Next, Marian discusses “mobile-first, mobile-only”. 90% of startups in China create apps and mini-programs. Some startups do not even have websites; instead, their first and primary focus is mobile solutions. He adds that there is also a lot of reliance on WeChat nowadays, adding to this culture of “mobile-first, mobile-only”.

China will lead the way when it comes to VR and AR. A lot of startups today are focused purely on VR and AR solutions. More than one startup is incorporating these technologies into marketing and advertising, and they have already created successful and cost-effective campaigns as a result.

Likewise, a lot of Chinese startups are focusing on AI. Much of that influence can be attributed to the government. This is because, in order to dominate the market, China’s government is pouring funds (i.e. for grants, incubators, etc.) into AI-related ventures, giving startups the opportunity to constantly innovate in this industry.